Question

Suppose the interest rate is 7.3 % APR with monthly compounding. What is the present value of an annuity that pays $ 80 every three months for four ​years? ​(Note: Be careful not to round any intermediate steps less than six decimal​ places.)

Answer 1

PMT = 80
Rate per month = 7.3%/12

PV = 80/(1+7.3%/12)³ + 80/(1+7.3%/12)⁶ + 80/(1+7.3%/12)⁹ + 80/(1+7.3%/12)¹²+80/(1+7.3%/12)¹⁵ + 80/(1+7.3%/12)¹⁸ +
80/(1+7.3%/12)²¹ + 80/(1+7.3%/12)²⁴​​​​​​​ + 80/(1+7.3%/12)²⁷​​​​​​​ + 80/(1+7.3%/12)³⁰​​​​​​​ +80/(1+7.3%/12)³³​​​​​​​ +80/(1+7.3%/12)³⁶​​​​​​​
+ 80/(1+7.3%/12)³⁹​​​​​​​ + 80/(1+7.3%/12)⁴²​​​​​​ + 80/(1+7.3%/12)⁴⁵​​​​ + 80/(1+7.3%/12)⁴⁸​​​​​​​ = 1100.45

Please Discuss in case of Doubt

Best of Luck. God Bless
Please Rate Well